TMI Blog2010 (6) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... fessional activity. In our opinion, the agreement between the assessee and the doctors is one for providing professional services, and there is no element of employer and employee relationship existing. CIT(A) has rightly held that tax has to be deducted u/s 194J and not u/s 192. The doctors engaged by the assessee are to be treated as consultants, only for rendering professional services. The matter would be entirely different in case the doctors are re-employed as medical officers to work for fixed hours and they are given the facility of leave, PF, gratuity, bonus etc. Since such facilities are not given and what was paid to the doctors is only through a structured arrangement for the services rendered by them for two years, in our opinion, there is no employer and employee relationship existing. Therefore, the CIT(A) has rightly held that tax has to be deducted under section 194J and not under section 192 In the result, appeal of the revenue is dismissed. - N.R.S. GANESAN AND CHANDRA POOJARI, JJ. Smt. Nivedia Biswas for the Appellant. A.V. Raghuram for the Respondent. ORDER N.R.S, Ganesan, Judicial Member. - This appeal by the revenue is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 201(1) of the Act; the learned counsel for the assessee pointed out that the professional doctors engaged by the assessee were not bound by the rules and regulations, if any, framed by the assessee. The professional doctors have to maintain professional ethics in accordance with the rules framed by their professional bodies. Moreover, the doctors are not employees for the purpose of provident fund and other statutory rules. There are no fixed hours of working for the doctors. The doctors are free to select their own period of working in the manner in which they like. Therefore, there was no control or direction by the assessee to the consultant doctors. In view of the above, according to the learned counsel there was no employer and employee relationship. Therefore, the doctor has to be treated as consultant for professional services rendered. Accordingly, section 194J would be applicable and not section 192 of the Act. The payment made by the assessee, according to the learned counsel for the assessee is for contract for sendee in the nature of professional charges. Therefore, it cannot be treated as salary for the purpose of deduction of tax at source. 4. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, we cannot say that merely because the assessee hospital engaged the services of professional doctors it has always to be treated as Employee for the purpose of deduction of tax at source. The relationship between the assessee and the employee would depend upon the terms of contract between them. 6. We have also carefully gone through the decision of the AAR in Max Mueller Bhavan s case ( supra ). In the case before the AAR, the assessee proposed to engage honorary part-time teachers on contract basis to take classes in the German language during a semester. The applicant assessee would prescribe syllabus, fix the terms of semesters and review the work of the part-time teachers. Therefore, it was held that tax has to be deducted under section 192 of the Act as salary. The AAR placed its reliance on the judgment of the Apex Court in the case of Shiv Nandan Sharma v. Punjab National Bank AIR 1956 SC 404 and in the case of Chandi Prasad Singh v. State of Uttar Pradesh AIR 1956 SC 149. The AAR also placed its reliance on the judgment in the case of the Apex Court in the case of Ram Prashad v. CIT [1972] 86 ITR 122 (SC). In view of these decisions of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding professional services, and there is no element of employer and employee relationship existing. Therefore, in our opinion, tax has to.be deducted under section 194J as fee for professional services and not as salary. 8. We have also carefully gone through the judgment of the Apex Court in the case of Ram Prashad ( supra ). In the case before the Apex Court, the assessee paid remuneration and a percentage of gross profits in addition to monthly remuneration to the managing director (MD). In those circumstances, the Apex Court while considering the relationship of the company and the managing director, held that the board of directors of the company are to manage the business of the company and they have right to assess the work of the managing director whenever deem it necessary. The power given to the managing director emanates from the articles of association, which prescribes limits of exercise of that power. The power of the assessee was exercised within the terms and limitations prescribed under the articles of association subject to control and supervision of the board of directors. Therefore, the Apex Court held that there was a relationship of employer and employ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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